tv Nightly Business Report PBS March 17, 2011 6:30pm-7:00pm EDT
captioning sponsored by wpbt . >> disasters like this remind us of the common humanity we share. >> president obama works to ease fears at home saying the u.s. is not at risk from the radiation. >> susie: japan's disaster is raising questions about u.s. nuclear liability and the yen's continued surge as we continue our coverage of the japanese crisis. you're watching nightly business report for thursday, march 17th. >> this is nightly business this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by:
this program is made possible by contributions to your pbs station from viewers like you. thank you. >> tom: good evening, thanks for joining us tonight. president obama said today japan's nuclear crisis won't affect the united states, susie. >> susie: you know, tom, the president spoke this afternoon from the white house rose garden and said he doesn't expect a nuclear radiation to be a risk for people inside the united states. >> i want to be very clear. we do not expect harmful levels of radiation to reach the united states, whether
it's the west coast, hawaii, alaska or u.s. territories in the pas civic. >> susie: besides japan's nuclear crisis a big spike in the japanese yen is creating a currency crisis. finance ministers from around the world are holding an emergency conference call tonight to figure out how to bring down the value of the yen. it's been surging in the aftermath of japan's massive earthquake. the yen is howevering at it its-- hoferning at its highest levels since world war 2. sometimes a rising currency reflects investing optimism about a country's economy. but as erica miller explains that's not what is behind the rise of the yen. >> by now most of the world has seen the heart-wrenching devastation caused by the earthquake and tsunami in japan. the disaster claimed thousands of lives, derailed exports and destroyed energy supplies. but another serious threat to the japanese recovery can be seen on this computer scene. it's the yen's rise to
historic highs against the dollar. so why would traders and speculators want to buy yen when japan is facing such economic uncertainty? >> when a disaster like this happens, money comes back to the home country for many efforts. so there is the rebuilding effort. a lot of the insurance companies which invest globally then have to bring the money back to japan to engage in rebuilding efforts. >> economists constance hunter also points out international aid organizations will need to trade foreign currency for yen in order to buy supplies. and that could accelerate the trend. >> a rising yen is particularly bad news for japanese exporters. toyota, for example, manufacturers 38% of its vehicles in japan. shipping more than half of them to foreign markets. it takes a second hit exchanging those foreign profits back into yen. auto analyst warns toyota won't be the only one paying for higher yen. >> to any extent that they feel comfortable, they will put in some price increases but there's always a risk
with that because of the competitiveness of the market. so what they really are going to try to do most is offset the higher yen costs by finding further cost reductions throughout the business. >> reporter: unless there is a coordinated intervention in currency markets by central banks around the globe, many traders expect the yen will continue to rise. as currency strategist mike-- points out, the general trend has been in place for decades now. >> one of the factors behind that has been that they have a trade surplus. not trade deficit that we have in the united states. they also have very, very low levels of inflation and have had brief bouts of deflation which also puts an upward pressure on the nominal level of the currency. >> reporter: the rise in the yen is not entirely harmful to japan. it does make it cheaper for that country to import ray materials. and anything else that's needed to rebuild. erica miller, nightly business report, new york. >> back to japan's nuclear
situation now. president obama also said today that the u.s. nuclear plants are safe. he still though has asked the nuclear regulatory commission to review the safety of our domestic plants because of the disaster in japan. meanwhile the tokyo electric power company which operates the crippled japanese reactors hopes to have power restored to them tomorrow. now that could allow engineers to stabilize the situation. even once the full extent of the crisis is known, it will be years, though, before the full bill is tallied. as darren gersh reports, nuclear utilities are not likely to pay it. >> reporter: under japanese law, power companies operating nuclear reactors are responsible for any damage, except in case of a grave natural disaster of an exceptional character. wharton professor howard k urx nreuther expects the massive earthquake and tsunami will be considered a grave natural disaster relieving tokyo electric power the utility and ge the company that built the
crippled reactors from liability. >> i think in general from what i understand from the law in japan, the utilities or the plant operators are not really liable for all that much money. and they may not be liable for anything with respect to it ist is an exceptional disaster. so in some sense it will be up to the japanese government which means the japanese tax pay ares in some sense that will have to pay for this. >> reporter: the experience in japan is reigniting a debate in the united states over liability for nuclear accidents. first passed in the 1950s, the price anderson act now caps the u.s. nuclear industry's financial risk at $12.6 billion in damages. energy activist tyson slocum says u.s. taxpayers are on the hook for anything above that. >> it is now more than 50 years later and a very mature, very profitable and very well run industry continues to claim that they shouldn't have to go out not private marketplace and get cat strafk risk insurance.
>> reporter: india, a big nuclear growth market allows plant operators to ask companies that design and build reactors to help pay for accidents. the nuclear industry wants india to follow international standards limiting liability to plant operate ares. michael rencheck is chief operating officer of areva, a company that designs and builds reactors. >> no, i don't think any company would be willing to take that type of liability on. that's why here in the united states we have the price anderson act that provides a comprehensive insurance policy and also there is industry insurance where all the operators pool resources to provide insurance attributes for those facilities as well. >> reporter: the full extent of the fallout and the liability from the japanese nuclear disaster may not be known for weeks. the head of the u.s. regulatory commission says it may take that long for workers to bring the japanese reactors under control. darren gersh, nightly business report, washington. >> tom: here are the stories in tonight's nbr news real.
positive news on jobs helped wall street rally, the dow industrials jumping 161 points, the nasdaq gaining 19, s&p 500, up 16 and change. as for volume, pretty moderate, just over 1 billion shares moving on the big board, 2 billion shares on the nasdaq. it was applications for new jobless benefits that fell more than expected last week to 385,000. now that's the third decline in the past four weeks. and the senate has approved $6 billion in spending cuts, in a bill to keep the government running for three more weeks. lawmakers say this will be the last short term measure before they strike a deal to fund uncle sam through september. still ahead tonight with cutting the massive federal deficit a priority on both sides of the aisle, tonight's commentator says what we need is a simple solution. >> susie: our guest tonight says despite the uncertainty in japan, this is a good time to buy stocks, especially shares of american companies. joining us from miami stuart
schweitzer, global market strategist at jpmorgan private bank. hi, stu, nice to you have with us. >> hey, susie, always a pleasure. >> susie: so you told me you are bullish. is that because that you are more focused on what is going on with the u.s. economy and less about what is happening in japan and the global economy? >> well, susie, the situation in japan, it's so tragic, it's so sad. but japan has been sluggish for a long time. and meanwhile the rest of the world this is all happening at a time when the rest of the world is actually getting a lot stronger. so it does, it does make me feel as though there is continued upside potential in the market. we haven't changed our strategy at the jpmorgan private bank. but i do think that investors who are sitting on the sidelines with a lot of cash are being presented with an opportunity to buy stocks when they're on sale. >> susie: so what is the opportunity? you said american companies.
what types of american companies. i know you can't name names but what types of companies should investors be looking for? >> well, susie, this has been an extraordinary recession and now recovery with corporate balance sheets so strong and companies held back there capital spending in the earliest stages of the recovery. but now companies are increasing their capital spending materially and i think that presents an opportunity for investors in industrial shares as an example. i also believe that the consumer is going to be getting some help. tom just read some numbers on the improvement in jobless claims. the improvement in the job market. and i think consumers are going to be getting some help and that should be helping consumer discretionary spending as well. i was just going say, i wouldn't confine my attention, though, just to the u.s. market. because the other part of the global economies that's been strong, it's taking a
backseat in the last couple of months because it got kind of expensive but it's now a better value again s the whole emerging market record. i would emphasize emerging asia, and i like korea in particular. i would emphasize latin america where i like brazil in particular. >> susie: all right that was the question i was going to ask you. you jump add head of me i was talking to a money manager today who was saying that he is less worried about japan and more worried about what's going on in the middle east in libya and bahrain and with oil prices. does that concern you? do you agree with what he is saying? >> oh, of course. if oil were to suddenly become unavailable and prices were to spike, say back to where they were three years agoing when they hit roughly 150 dollars a barrel f that were to happen overnight t would strike a pretty tough blow if he world economy and world market. but if all we have is more
of the same and i do think that's what's more likely, just more of the same anxieties, but nothing dramatically changes, then i think we'll cope with it. as long as we have time to adjust to gradually higher oil prices rather than to have to deal with suddenly sharply higher prices overnight. >> susie: now, stu, some people are still worried about taking their cash and putting if to work in the markets. what is the safest place for people to put their money if they're nervous? >> oh, susie, there is, of course, no guarantee of safety anywhere. i any that for people who are nervous and have nothing invested in risky assets, that a particularly attractive place before the stock market is the bond market, the segment of the bond market that is exposed to credit risk, high-yield bonds as an example, where the spreadses are still very wide. and because companies have
such really strong balance sheets this has been an area of great opportunity, much of the opportunity has been realized. but i think there's still more potential for decent returns ahead. in equities, in equities, well, nothing safe in a massive downturn. but i think the u.s. equity market looks pretty good to me. >> susie: we have to leave it there. stuart, thank you so much. >> always a pleasure. >> susie: you gave us lots to think about. we've been speaking with stu schweitzer, global market strategist at jpmorgan private bank.
>> one american company that got a lot of attention was fedex. >> tom: it certainly did. we also saw oil prices creep back over 100 a barrel but nonetheless for the first time in four sessions here, we did see the major u.s. stock indices finally close higher. buyers moving into this market. let's get everyone updated with tonight's market focus buyers stepped back into stocks today, helping the s&p 500 regain positive territory for the year. crude was able to regain the $100 per barrel mark. oil hits this high four days before the japanese disaster. and we saw some profit-taking on concerns about a slow down in
oil demand due to japan. the oil rebound helped energy stocks. consol energy led the sector. it produces both coal and natural gas. both are expected to be in demand thanks to the nuclear power situation still developing in japan and other countries reviewing their nuclear power programs. consol is at a new 52-week high. noble energy produces both natural gas and oil. shares added more than 5%. shares have been trending nicely since june, rallying more than 60%. companies involved in natural gas exploration rallied as the u.s. department of energy predicted japan will increase imports of liquified natural gas to meet its energy demands. northern oil and gas added more than 5%.
it drills for energy in the rocky mountains. driller nabors industries was up 5%. explorer oceaneering international gained 4%. while the market anticipates better demand for natural gas, it continues punishing shares of uranium miner cameco. the stock dropped another 5% today and has plunged 26% since the japanese earthquake and tsunami. the stock has lost more than a third of its value since its high in the middle of last month. some household tech names were finding buyers. hewlett packard was the best performing dow industrial stock with this 3% gain today. the stock remains well below its february high when it was knocked down by worries over about slower computer sales growth. helping shares today was a credit suisse report rating
shares an outperform. that same report also pointed to apple and data storage company e.m.c. as technology leaders. both shares rallied. wireless chip maker qualcomm bounced back some after yesterday's losses. this is the past 90 sessions. the stock hit a three-month low yesterday before rallying almost 4% today. the firm said it does not see any affect on its business from the disaster in japan. meantime, contract electronic parts maker sanmina fell like a rock today, losing a fifth of its value as volume quadrupled. it cut its second quarter outlook, blaming it on slow new orders coming in from the federal government. management says the drop in defense orders is related to the budget mess in washington. watch for these results from nike to hurt its stock tomorrow. earnings were four cents less than expected. japan was the only location where sales fell, indicating
weakness even before last week's earthquake. nike shares were fractionally higher before the results. they had had trouble getting over $90 per share as it has been turning around global sales. still, with tonight's earnings disappointment, shares dropped to just above $80. and that's tonight's "market focus."
>> susie: banking regulators are going after washington mutual's former leaders, almost two years after it collapsed. the f.d.i.c. sued former c.e.o. kerry killinger, former coo stephen rotela and the head of wamu's home loan division david schneider for gross negligence. the agency says the men encouraged risky mortgage lending and wants $900 million in damages. now killinger and rotela's wifes were also named in the suit. prosecutors say both men transferred cash and property into their wife's names to keep it safe from creditors. attorneys for the former executives called the suit baseless. >> tom: here's what we're watching for tomorrow. we have some oil prices. they've been pushed and pulled in recent weeks by international crises. we will take a look at what's ahead. and even with worries about supplies from japan, our friday market monitor likes the technology company and a u.s. automakers. it will be richard steinberg, president of steinberg global asset management.
>> susie: in a first for the ns to long-termncoln is tops vehicle quality so says j.d. power & associates. the research firm says lexus followed in the runner-up slot on its most dependable list. jaguar, porsche and toyota rounded occupy the top five. the survey measured problems experienced during the past year by original owners-of-three-year-old autos. dependability is a major factor for buyers when car shopping. >> tom: as demand for solar power heats up, first solar is expanding. the solar panel maker announced plans today to build a $300 million production facility in mesa, arizona. the plant will nearly double first solar's output it hopes to break ground later this spring creating as many as 500 construction jobs. once completed, the plant will need 600 workers. first solar shares, meantime, slipped today closing at $154. they're up though 34% over the past year.
>> reporter: remember four months ago when a dozen new plans to tackle america's budget deficit were rolled out? there was president obama's bipartisan commission. there was the ryan plan, "the new york times" 16 experts plan. >> i think even lady ga ga offered a plan. and so what happened? let's be honest. the half-life of budget plans is about three news cycles. so here's a suggestion. stop making plans. rather than starting with details, the congress should start with a simple goal. rather, the law should force congress to simply have a goal. how about a one cent solution. cut one penny from every dollar that uncle sam spent last year. next year cut back another penny. the one cent solution would lead to budget surpluses in seven years. now the self-appointed grown-ups in washington call the one cent solution and the balanced budget amendment gimmicks. they're wrong. after decades of plan, red ink, repeat, voters should
realize that detailed plans are excuses for inaction. that's my two cents. i'm tim kane. >> tom: finally tonight, the business community is stepping up to help earthquake and tsunami victims in japan. so far corporate contributions have topped $151 million. some 47 companies have donated a million dollars or more. right now it's the fourth largest response to a natural disaster behind hurricanes katrina and rita. the indian ocean tsunami and last year's earthquake in haiti. susie, the u.s. chamber of commerce expects corporate donations to keep coming in as we learn more about the japanese disaster in the days, weeks to come. >> susie: it all helps. >> tom: certainly it does. that is nightly business report for this thursday evening. march 17th. thanks for joining us. we want to reminds you, this is the time of year your public television station seeks your support. >> susie: it is the support that makes programs like nightly business report possible. >> tom: thanks for joining us tonight. don't forget to support your local public television station have.
a great night. >> susie: same to you. i am a susie gharib. hope to see all of you again tomorrow night. >> nightly business report is made possible by this program was made possible by contributions to your pbs station from viewers like you. thank you. ptioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org vo:geico, committed to providing service to